Software and Hardware Economics Business

TOBIA RAHASTYA ABRAM

4EA09 - 17212419 

FAKULTAS EKONOMI GUNADARMA

TUGAS BAHASA INGGRIS BISNIS 2 #

Name             : Tobia Rahastya Abram

Class              : 4 EA 09

NPM             : 17212419

English Business 2#

 

Software as a Service?

Software as a Service is an interesting concept. It implies that, instead of purchasing the software, you are purchasing it as a service—which really means the right to use the software.

You are also (usually) purchasing a hosting and infrastructure service along with the rights to use the software. SaaS providers maintain the hardware, perform upgrades, backup your data (sometimes), and otherwise perform all of the “keep the lights on” services and activities required to keep the software running.

Imagine a typical, 1990s style software purchase:

• You buy a source code control system.
• You set up a server and install the software.
• You pay ongoing support costs: providing power to the server, keeping the server cool, applying security and operating system updates to the server.
• You pay costs associated with administering the hardware and labor costs to update and upgrade the software.
• You carry risks—a botched upgrade or a hardware failure—which can cause downtime or lost data.
• You bear the costs of designing and maintaining a secure system. Do you allow your people to access the software (on the server) from other computers on your network? Do you allow them to access the software when they are not on the network (traveling, working from home, etc.)? How do you prevent your competitors from stealing or, even worse, destroying your data?

Now imagine that you’re outsourcing all of the “keep the lights on” activities above:

• You pay an IT services firm to manage the hardware and the software for you, including the security model.
• And you just use the software.

That’s one of the benefits of purchasing SaaS. To really grasp the economics of SaaS you have to contrast it with the economics of software license purchases.

Widespread misunderstanding

There is a widespread misunderstanding about purchasing software. In the last section, we used the word “purchase,” but that isn’t completely correct. You don’t purchase a copy of the software; you purchase a restricted license to use the software.

You probably have heard the phrase “site license,” which means that you are purchasing the right for everyone in your building (or company) to use the software.

Sometimes software is sold in terms of “numbers of seats”—the number of people that are licensed to use the software at any one time. You might have 100 engineers who share ten seats (single-seat licenses) of analysis software. Since each engineer only spends about 5% of his or her time using the software, they can easily share licenses. At any given time, five engineers (on average) will need to use the software. With a license for ten simultaneous users, each engineer is likely to be able to use the software whenever he or she desires.

So, even when you think you are purchasing software, you aren’t. As with SaaS, you are purchasing the right to use the software.

Economics of software licensing

There are infinite creative ways to purchase a software license. The most common situation is that you purchase a license, and then later purchase upgrades.

An obvious example is Microsoft Office (productivity software). Microsoft releases a new version of Office every couple of years. If you own the previous version, you can purchase an upgrade for less than the cost of buying the software for the first time. You are not required to purchase an upgrade, of course, but you may want to in order to capitalize on the latest features and fixes—and to stay current. If the people with whom you work all upgrade, you may want to upgrade, too—so that you can use the documents they create. 

Microsoft does a good job of providing free utilities to read documents from the newer versions, and allowing people with newer versions to create documents that can be used by people with older versions. Microsoft, therefore, gives you a choice. They rely on market forces to create the pressure to upgrade, but you never have to upgrade.

On the other hand, Intuit, makers of Quickbooks (small business accounting software), is a little pushier. Intuit releases a new version of the software every year. Once a new version of Quickbooks is released, support for some or all of the integrated online services is dropped for older versions of the product. You can continue to use your old version, unless you want to use one of the integrated services.

When companies sell software (licenses), they usually sell a version of the software, and then make updates to that software with some frequency—anywhere from daily to annually. Companies also manage those updates as two distinct types of updates:

• Minor updates are usually free and often include bug fixes or features that were intended to be in the major release, but were delayed. Or they might just be the introduction of capabilities with “small” value to their customers. A lot of software will automatically notify you, download the update, and install it for you. That’s great service.
• Major updates usually require the purchase of an upgrade. Major updates are usually more significant; they introduce capabilities that have “large” value to their customers or are intended to make the product appealing to additional markets.

To understand the economics of software license purchases, you have to look at both the value over time and the costs over time of purchasing a software license.

To keep this simple, we’ll assume the model described previously—minor updates happen frequently and are free, and major updates require the purchase of an upgrade to the latest version of the software. We’ll also assume that every new update introduces something valuable to the customer.

A Solution for IT Issues in Hardware Management Software

Even for the most experienced IT manager or network admin, being assigned the task of creating a network inventory list of hardware can be a daunting task. After all, just think of all of the hardware devices in your office, such as computers, routers, servers, printers, and more. The task gets even more complex if you’re asked to collect a great deal of detailed information on each item. Finding the righthardware management software can help to simplify this task. But what should you look for?

Finding the right hardware management software

A good piece of hardware management software can be used to generate a detailed network inventory list in a way that meets your needs. To be truly helpful, the software should be customizable to tell you the information important to you like Windows events, hardware serial numbers, software installed on computers, hotfixes applied, and more. Really good hardware management tools will even help you save time and money by tracking software licenses for compliance reasons, and to maintain control over your bandwidth. What's more, it can even help you with loss prevention.

Hardware management tools work by collecting network inventory data on your behalf by using either a scanning agent or agentless scanner to collect data across the network.

While scanning agents need to be used on each and every computer, the benefit is that they can get around firewalls and antivirus programs, provided you set access at the admin level. In addition to having to scan every computer, scanning agents' other downside is that you have to update each computer as new versions of the software are released.

Agentless scanners can scan your network from one central location. There is no need to collect and maintain inventory data about your company's various hardware devices on your own.

By using a management software program, you can get an accurate snapshot of your network without taking up too much of your valuable time.

Key Features of IT Asset Management Systems

IT managers continually require exact information on the location, configuration, and identity of computer hardware and software. They also need access to contracts, budgets, documentation, training materials, and warranties associated with assets to properly manage them through their life cycle. Keeping up with the myriad records on IT assets can be a time-consuming and error-prone process without suitable tools to assist the effort.

IT asset management (ITAM) systems aim to reduce the labor required to satisfy these requirements while increasing the reliability and completeness of this information. The rationale for investing in ITAM systems includes cost reductions through improved purchasing, better utilization of assets, reigning in of maintenance contract and software licensing costs, and better management of the overall asset life cycle. Asset management systems can also reduce risks associated with regulatory compliance, software licensing, and security vulnerabilities. For organizations adopting IT Infrastructure Library (ITIL) best practices, deploying an asset management system coupled with a configuration management database system is often an essential first step in the process.

This Research Byte is a summary of our full report, Adoption of IT Asset Management Systems Reaching Maturity.

ITAM applications provide tools for managing the life cycle of assets, from recording purchase and installation histories, to maintaining inventories of hardware and software assets, to planning for the removal and disposal of assets. ITAM systems can be more than a repository for storing and reporting information. They can also automatically capture information on assets deployed in the environment, help manage configurations, and support monitoring of assets.

But having an accurate inventory of IT assets is not the end goal. Business value comes from fully exploiting those assets through better management. Figure 1 shows the key activities that IT managers must perform to fully realize value from an IT asset management program.

The full version of this report provides an overview of ITAM economics. We review the key activities supported by ITAM systems and key features found in leading vendor solutions. We then assess adoption trends, return on investment (ROI) experience, and total cost of ownership (TCO) experience of organizations in our annual IT technology trends survey. The data is assessed for the composite sample of 200 organizations and by organization size and sector. We conclude with our recommendations on requirements that ITAM systems should meet.

Properly applied, ITAM is usually cost-effective. Knowing precisely what equipment is owned and the current status of each item is essential. Because ITAM tracks all such components, it makes the retrieval of documentation and training easy for all organizational assets. In addition, complete visibility of hardware and software ensures legal and licensing compliance. Finally, the same visibility also simplifies achieving standardization. These benefits of ITAM, coupled with low risk and excellent economic performance, make the technology a wise choice for most companies.